Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/203164
Authors: 
Hertweck, Matthias S.
Lewis, Vivien
Villa, Stefania
Year of Publication: 
2019
Series/Report no.: 
Bundesbank Discussion Paper 29/2019
Abstract: 
We introduce two types of effort into an otherwise standard labor search model to examine indeterminacy and sunspot equilibria. Variable labor effort gives rise to increasing returns to hours in production. This makes workers more valuable and contributes to self-fulfilling profit expectations, raising the likelihood of indeterminacy. Variable search effort makes workers search more intensively in a tighter labor market, which alleviates congestion and reduces the likelihood of indeterminacy. Indeterminacy disappears completely when vacancy posting costs are replaced with hiring costs.
Subjects: 
determinacy
effort
hours
labor market frictions
search intensity
JEL: 
E23
E24
E32
E64
E71
ISBN: 
978-3-95729-613-9
Document Type: 
Working Paper

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